Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, said Monday that he wanted to set the record straight by reiterating that the agency is “still very much in the fair lending business.”
“Thank you for helping us send the message that we are still doing fair lending, we are still in the fair lending business,” Mulvaney said at a CFPB day-long symposium on consumer access to credit.
The comments came after a move in February in which Mulvaney tried to strip the fair lending office of its enforcement authority, which is mandated by the Dodd-Frank Act.
Mulvaney said that the media misinterpreted what he was trying to do.
“You may have read a bunch of things or seen a bunch of things saying we are out of that business, and nothing could be further from the truth,” Mulvaney said. “I hope that you take this symposium as evidence of that. We are still very much in the fair lending business and we going to remain active in that space.”
The fair lending office is still listed in the CFPB’s organizational chart as an equal division alongside supervision and enforcement. The office is also still headed by Patrice Alexander Ficklin, who ran it under Democratic CFPB Director Richard Cordray.
Mulvaney's efforts to move fair lending to another division and strip it of its enforcement powers have so far been unsuccessful. The CFPB did not respond to calls seeking comment.
Mulvaney spoke for just two minutes at the symposium, where he praised the CFPB, including Ficklin, for trying to help unbanked and underbanked consumers gain access to credit.
Non-QM continues to boom – and it’s more important than ever for mortgage originators to add it to their toolbox, according to Angel Oak Mortgage Solutions.
“I think it’s an absolute must,” said Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions. “It’s more than important – I think as a loan officer today, if you are not offering non-QM, you’re short changing yourself and allowing competitors to take business from you.”
Hutchens said the company was focused on training loan officers on how to promote and sell non-QM products.
“As the market has pulled back and refinances have gone down, everyone wants to go after purchase transactions,” Hutchens said. “Non-QM, to me, is the perfect purchase product. It gives loan officers more tools to go after more homebuyers. They need to get in front of not only real estate agents, but builders and even other loan officers. So we’re teaching them how to expand their network. Expanding that network and using non-QM products to leverage that expansion is how they’re going to build a bigger purchase business.”
Non-QM’s comeback is still a relatively recent phenomenon – all the more reason, Hutchens said, for originators to make sure they’re educated on the space.
“We’re still at the very early stages of loan officer awareness and education – and even earlier stages for everyone else in the real estate food chain. Realtors and builders really don’t understand non-QM at all.”
“Non-QM right now is around 80% to 85% purchases,” he said. “That statistic tells me that if you want to be a purchase-oriented loan officer, you have to offer non-QM.”
Dear Valued Mortgage Professional
As your NAMB President, I am pleased to report that our advocacy work on your behalf has led to a successful ‘YES’ vote in the House Financial Services Committee on the Mortgage Fairness Act of 2017, H.R. 2570, a critical bill that will now better serve consumers and mortgage brokers throughout the United States.
This bill aims to amend the Truth in Lending Act which revises the definition of "points and fees," for purposes of determining whether a mortgage is a "high-cost mortgage," to: (1) exclude compensation taken into account in setting the interest rate and for which the consumer was not separately charged, and (2) include compensation paid by a consumer or creditor to an individual employed by or contracting with a mortgage originator.
“The passage of the Mortgage Fairness Act of 2017 marks a great day for our industry,” said Valerie J. Saunders, Executive Director of NAMB. “As a past Government Affairs Chair of NAMB, I would like to personally express the utmost gratitude for the leadership expressed on this bill by Congressman Jeb Hensarling, Chairman of the House Financial Services Committee, Congressman Blaine Luetkemeyer and Congressman Bill Posey, as the bill's sponsor, as they led the committee’s efforts to pass this critical piece of legislation. I am also very proud of the tireless energy the extended NAMB team put forth in this process as they played a large roll in this successful effort.”
The industry lost a Supreme Court battle in 2015 protecting the use of "disparate impact" in housing discrimination cases, but legal observers see potential for the fair-lending tide to turn if Judge Brett Kavanaugh is confirmed to the high court.
The 2015 ruling, related to how Texas awards housing tax credits, bolstered the legal standard under the Fair Housing Act that lenders can be punished for a discriminatory result they did not intend.
But the court has yet to resolve questions on two other topics related to fair lending that experts say could have more favorable results for banks if the Supreme Court moves even further rightward with the addition of Kavanaugh.
One deals with whether disparate impact applies to cases argued under a different law, the Equal Credit Opportunity Act. The other involves whether cities and other jurisdictions can claim damages, such as lost tax revenue or foreclosure-related costs, from lending policies alleged to have harmed minority borrowers.
"To the extent that you have a more liberal judge, they are more likely to say that disparate impact is fully applicable under ECOA," said Rod Alba, senior vice president for mortgage finance at the American Bankers Association. "To the extent that you have a more conservative judge, they are more likely to rule that disparate impact does not apply under ECOA."
But the other question, regarding cities arguing that a bank's discriminatory lending practice was a "proximate cause" of injury, may come up sooner with at least three different lawsuits moving through lower courts.
"Where we think the law can develop is in further establishing what exactly is that robust causality, what is that proximate cause. That’s where we think the court could set a very high bar," said Richard Andreano, practice leader of Ballard Spahr's Mortgage Banking Group. "While it would allow the claims still to exist, it could set the bar very high to really limit it to cases where the plaintiff clearly showed that the practice they were complaining of did in fact lead to the disparate results that they’re citing."
WASHINGTON — The leadership of the Consumer Financial Protection Bureau may soon be in play again as President Trump is reportedly weighing whether to pick a new White House chief of staff.
At the top of his shortlist is Mick Mulvaney, who currently pulls double duty as head of the Office of Management and Budget and the acting director of the Consumer Financial Protection Bureau. If Mulvaney were to get the nod from Trump, he would likely need to give up control of both agencies.
While Mulvaney downplayed these reports on Friday, the speculation has left many wondering what the administration would do with the CFPB if Mulvaney got promoted.
Following is a guide to the possibilities:
Trump picks another Senate-confirmed acting director
Trump has two ways to pick an acting director. The first, via the Federal Vacancies Reform Act, allows him to pick anyone who is already confirmed by the Senate, while Trump’s permanent nominee, Kathy Kraninger, is vetted by the Senate. That statute is what Trump used to install Mulvaney in the first place.
That gives Trump flexibility for who to pick as a temporary steward, including recently-confirmed heads of other banking regulators, such as Comptroller Joseph Otting and Federal Deposit Insurance Corp. Chair Jelena McWilliams.
“Who would that be?” said Isaac Boltansky, director of policy research at Compass Point Research & Trading. “Would it be the head of the OCC?”